IIoT investment and development could be slowing down

Decreased pace of growth on Kickstarter could signal easing in investment and development of IoT products and services, according to a new report.

In a study titled IoT State of the Union 2016 study released by Wing Venture Capital this week, the Industrial IoT (IIoT) sector is easing off but “grassroots entrepreneurial activity still appears moderately healthy”, according to its authors.

It said there was a parallel to be drawn between the Internet of Things and the spread of electricity to US households in the 1900s.

“As electrical power made its way into more and more homes, entrepreneurs set to work developing new products to take advantage of this phenomenon. But it took decades for some of the most innovative applications to appear,” the report’s authors said.

“The Internet of Things is at the same stage today as electricity was in the early 1900s: we can see the potential of this new wave, but only a small fraction of things are currently connected to the internet and the pace of change has been slower than many would like. That’s reflected in recent negative media headlines, which echo a view that the IoT has been overhyped and has under-delivered.”

Anecdotal evidence of IoT

Successfully funded IoT-related projects on Kickstarter are also set to rise again in 2016, but the pace of growth is slowing, said the report. There was also similar slowdown in the growth of accelerator deals, but there was some positive anecdotal evidence.

“Techstars, for instance, recently reported that its 2016 IoT program had received double the number of applications that its previous program had seen in 2014. It will be interesting to see if signs of an overall slowdown in grassroots activity become more pronounced in 2017,” said the report.

But a pick-up in activity could soon be on the way, authors said. Investors in industrial IoT were seeing a swift return on investment that use data and predictive analytics provided to minimize unplanned downtime and outages.

“On the Enterprise front, we saw a reasonable amount of activity in sub-categories such as building management services, healthcare and retailing.”

The authors concluded that there is scope for continued optimism as mergers and acquisitions in the Industrial IoT space totalling more than $200 million are on pace to increase this year.

“Nevertheless, the increase in large deals is a sign that incumbent firms who see the Internet of Things as an opportunity are willing to commit significant sums of money to acquisitions,” said the report.